Kids Allowance

March 11, 2010

Do you have a child? When you are teaching them about right and wrong, throw in a lesson or two about money. Here is some advice on how to teach them about it.

Money is important in the world because it is how things are bought and sold. Money, in and of itself, doesn’t bring security but knowing how to use it does. Even at a young age, if your kids can handle doing chores around the house, then maybe it is time for them to have an allowance. Even with the economy, you don’t have to go overboard with an allowance, so long as it is age appropriate.

For example, a child of about eight may get as much as five dollars a week. It is a reasonable amount that they will have to hold onto for a little while to be able to buy anything of significance. When you offer an allowance, try to give it to them on a regular basis each week. This is how they would get paid in the real world.

Is this free money? It doesn’t have to be. Let them perform set chores to earn their allowance. Whether or not they can earn more by doing extra is up to you.

Once they get their allowance, sit down with them and ask them what they would like to do with it. Most little kids will want to run to the store right away. This is the perfect time to teach them about saving. They are learning about addition and subtraction in school, so use their allowance as the basis of the lesson.

Let’s say that John earns five dollars a week for allowance. If he decides to buy a pack of candy that costs one dollar (with tax) he is left with four dollars. He puts that away or spends it. If he spends the other four dollars he is left with nothing. If he saves it in his wallet or piggy bank, then he is still four dollars to the good.

John saves four dollars of his allowance each week, and then out of the possible twenty dollars he can earn each month, he will still have about sixteen left over. It is a win-win situation for your child. They get to use money and how to save it as well.

Another idea is to get them a wallet. When they want to go to the store, remind them to take their wallet with them. If they want something, help them decide if they have enough money or not. And, don’t forget to factor in tax. Your child can count out and give the money to the cashier and take their change and receipt. It will feel good to them to make a purchase.

Children are smarter than we often give them credit for. When it comes to money, use your child’s allowance to begin lessons on managing money that will hopefully last a lifetime.

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